Lawsuit Against US Copyright Group For Fraud & Extortion Moves Forward

from the conduct-is-actionable,-it-seems dept

US Copyright Group was the first of the US-based copyright trolls, suing thousands of individuals in a single lawsuit, trying to get them to pay up (rather than going through an actual trial). US Copyright Group is really a front for a DC law firm, Dunlapp, Grubb & Weaver. One of its very first "big" lawsuits was against about 5,000 people for supposedly partaking in the sharing of Uwe Boll's Far Cry. Of course, as we had noted, there was a pretty big problem in the Far Cry lawsuit, in that the US copyright registration was filed too late for many of the accusations of infringement.

Partly on the basis of the registration problems, Dmitriy Shirokov (with the law firm Booth Sweet) sued US Copyright Group, DGW and its key lawyers for fraud, extortion and conspiracy back in 2010. DGW shot back angrily, claiming that it's perfectly fine for for lawyers to lie to the court, if it's part of the course of litigation:

"Although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable,"

Of course, the threats and extortion weren't actually "during the course of litigation." DGW also claimed that there was no "harm" for Shirokov, because he didn't settle, and thus hadn't paid up. DGW then went even further, asking for sanctions against Shirokov and Booth Sweet, claiming that it was actually them who were filing lawsuits for "improper purpose."

The court has now ruled in response to DGW's motion to dismiss, and it seems pretty clear that the judge is not impressed by DGW at all. The motion to dismiss was rejected and the class action lawsuit against the company moves forward.

Judge Boal recommended that the motion for dismissal be denied in significant part. The defendants had argued that Mr. Shirokov was not entitled to sue them at all, since he wised up before paying their demands, and his claimed injuries were out-of-pocket costs of investigating the threats. They claimed that the Noerr-Pennington privilege, an antitrust doctrine, prevented any liability. And they argued that lawyers and their clients have absolute immunity for even intentional torts, or in DGW’s words: “although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable.” Just think about that one for a minute.

Judge Boal thoroughly debunked each of those claims. The fees Mr. Shirokov incurred in investigating the trumped-up copyright claims constitute an injury-in-fact that gives him standing to sue. The Massachusetts litigation privilege does not apply to threats of litigation that are not seriously contemplated in good faith. And the Noerr-Pennington antitrust doctrine did not apply outside of antitrust law, and even the First Amendment right to petition isn’t an absolute protection for litigation threats.

It's important to note that, in this case, it's the specific issue of the non-registered copyrights that is key. That is, the lawsuit isn't about the general practice of copyright trolling -- but the fact that it was done using claims and demands that were not true (e.g., the statutory damages if found guilty of sharing, even though such statutory damages were not available for a work that hadn't been registered).

Along those lines, the court didn't completely side with Shirokov, saying that some of the racketeering and fraud charges should be dismissed. But, large parts of the lawsuit survive and will move forward -- which doesn't seem like a good thing for DGW or US Copyright Group. Perhaps, next time, they'll check the copyright registration before filing suit.

Filed Under: copyright, dmitriy shirokov, fraud, registration, thomas dunlap, trolls, uwe boll
Companies: booth sweet, dunlap grubb & weaver, us copyright group